The slump in energy commodities and copper shows the fragility of the global economy and the risks to the consensus’ reflation trade. It is easy to blame the recent fall of commodity prices on the coronavirus outbreak, but the weakness was already evident before the outbreak.

Market participants’ excess of optimism with the trade agreement between the United States and China is clearly exaggerated, once we have the details.

Both the United States and China’s economy have suffered a mild impact from trade disputes. The United States saw a mild slowdown in growth but did not suffer inflationary pressures from the tariffs, while its trade deficit shrunk reduced to the lowest level in 17 months and unemployment is at a minimum of 50 years. In the case of China, the growth of the economy (even adjusted for inflated data) was less affected by the trade war than many feared. Although its exports grew much less than expected, it has been able to increase them somewhat, 0.5% in 2019.